CNBC’s Brian Kelly Explains Why Bitcoin Is Headed for a New All-Time High

On Wednesday (April 10), Brian Kelly, the founder and CEO of crypto hedge fund BKCM LLC, said that solid fundamentals are behind the "resurgence" of interest in Bitcoin (BTC), and explained why he believes that the Bitcoin price is headed for a new all-time high.

Kelly, on CNBC's "Fast Money" show, was asked by host Melissa Lee to explain what was behind the price of Bitcoin reaching levels this month that were last seen in November 2018.

Kelly started by saying that there is "a really good chance" that the $3,200 level we saw in December 2018 is the bottom for "this cycle".

He then went on to talk about Bitcoin's improving fundamentals:

"Active Addresses" (number of active wallets): This is "one of the big metrics" he looks at. This is "up 26% from the January lows."

Transactions are "back to 2017 levels."

Fidelity is busy "rolling out" its "institutional platform."

CME Bitcoin Futures: The number of "large open interest holders" is at an all-time high and "continues to grow." (Kelly is correct that the CME Group saw "record volume" for its "Bitcoin futures"; according to Bloomberg, "CME Bitcoin futures hit a record 22,542 contracts traded on April 4, equivalent to 112,710 Bitcoin with a notional value of $546 million.")

Kelly then added:

"So, you are starting to see institutional investors come in here with a good fundamental tailwind, and that's got Bitcoin back in the saddle again."

Next, Lee asked Kelly if we will see the Bitcoin price hit "record highs". Kelly answered without any hesitation:

"Without question, this next cycle... You're talking a two-year cycle. So, generally speaking, in 2020, the supply of Bitcoin is going to get cut in half [Kelly is referring to the halving of Bitcoin mining rewards]. The cycle for Bitcoin is usually from about a year before to a year after. So, over this two-year period, you will likely get this big upswing, particularly if the institutions come in, and I think we surpass all-time highs."

Roughly a week earlier, on April 4, as CryptoGlobe reported, Thomas Lee, a Managing Partner and Head of Research at independent research boutique Fundstrat Global Advisors, was invited to an interview on CNBC's popular morning news and talk program "Squawk Box" to talk about the Bitcoin rally that started on April 2, and what it could mean for Bitcoin for the remainder of 2019. This is what he said about Bitcoin's fair value:

"So, if you were to take a combination of active addresses and activity per user, that's explained over 90% of Bitcoin since 2013. The fair value for Bitcoin, right now, is $14,000."

CME Looks to Double Bitcoin Futures Limit, but Is This Wise?

The Chicago Mercantile Exchange (CME) has a new request for its regulator, as it looks to double open position limits on bitcoin futures contracts in the face of significant interest.

Nasdaq reports that the CME has already petitioned its regulatory body, the Commodity Futures Trading Commission (CTFC), asking for an increase from 1000 contracts per spot month to 2000 per investor. Each contract represents five BTC, so essentially, at its peak, a single investor's total position may edge towards a monumental 10,000 BTC.

This is in direct response to the contract's recent growth which is currently depicting record levels of activity, citing $370 million being traded per day. A spokesperson for the CME noted that the idea to increase limits was proposed on the continued maturity of the market:

Based on the significant growth and acceptance of our financially-settled CME Bitcoin futures markets, as well as our analysis of the underlying bitcoin market.

However, as Nasdaq writes the increase in the upper limit of positions is somewhat superfluous. As of July, the number of open interest contracts reached an all-time high of just 6100; given this, it seems the CME may be future-proofing.

Open to Manipulation?

However, concerns remain about the limit increase, as without them, the potential for manipulation rises; often to the detriment to the underlying asset. Although, as per the CTFC website, the threat of manipulation from bitcoin futures contracts is "low":

In general, position limits are not needed for markets where the threat of market manipulation is non-existent or very low.

Instead, Nasdaq posited that this might point to a lessening on the CTFC's strict rule of bitcoin; as well as a maturing of the market in general.

Nevertheless, some believe the CME's bitcoin futures contracts do pose a significant threat to the price of BTC; with some suggesting that blatant manipulation continues unchecked within the market.

As reported, there seems to be a correlation between the expiry dates of CME bitcoin futures contracts and a lull in the price point of BTC. In several instances, a significant drop in bitcoin's price has coincided with a closure from the CME. The most recent example of this occurred on Labor Day, September 2, when bitcoin rose an extraordinary 8% shortly after the CME shut.

Crypto analyst, Alex Kruger, highlighted this, noting the large gaps which formed on the CME chart, from the price discrepancy before and after closing.

Whether this is a coincidence or the market is indeed being actively manipulated is as yet unclear. Either way, with the increase of these limits it might be only a matter of time until we know for sure.